HR & Management

Can I sleep on it? The impact of sleep on decision making

Whilst, within SMEs, few individuals, if any, are involved with decision making around the launch of astronauts into space, many make decisions that can affect the health and wellbeing of individuals every day – and are doing so on poor quality or quantity of sleep.

Leaders of SMEs are now, more than ever, operating in a VUCA world – volatile, uncertain, complex and ambiguous. They often disrupt the “blueprint” on how to do things, in ever-changing markets, in order to stay one step ahead of the competition.

The decisions required to operate effectively in these types of environments require divergent thinking – a level of creativity, of innovation of thought and of flexibility in thinking. Because often the problems needing to be solved are new and unique, with no prior experience that can be drawn upon. Sound familiar?

This is the territory of the agile SME leader, and decision making requiring divergent thinking is extremely sensitive to sleep loss. So sensitive in fact, that it can take just one night of sleep loss to have a negative impact at every stage of the decision making process.

Innovative thinking

A study was conducted with on-call anaesthetists, with just one night of sleep loss. When they were required, in a spur of the moment decision, to use a novel approach to solving a problem, their lack of sleep impaired their ability to be innovative in their decision making.

Not all decisions require us to be innovative, but often in fast-paced SMEs, where every choice has the potential to be magnified, where differentiation through innovative practice and/or innovative thought may be critical, this approach can be crucial. What happens when tried and tested measures fail? This is when innovation, flexible thinking and creativity are needed, and this is what may be a market differentiator.

Focus

Key to efficient and effective decision making is the ability to focus attention on the task at hand, and avoid distractions. Sleep deprivation of just one single night means we may struggle to retain focused attention. It becomes much more difficult to ignore distractions.

Keeping track of events

If a decision is complex, you will be gathering information and making decisions about what to do next. Do you need more data? Are you ready to act on the information? Do you trust the metrics given to you? Whatever the decision, you will need to consider all of the information available and update your strategic thinking as new data becomes available.

It is this updating of information and keeping track of events that is also vulnerable to sleep loss.
Individuals who are too tired often fail to update their strategic decisions based on the information they are receiving, and instead, ignore it, relying on “tried and tested” methods. This “set fixedness” means we stick with an old solution to a new problem, even when data suggests it may not or will not work.

Self-awareness

Perhaps all is not lost. Surely self-aware leaders can monitor their decisions and provide corrective strategies when the decisions are not successful. Right? Perhaps not – research has found that individuals who are sleep deprived become more confident about vague or ambiguous decisions and even after 350 milligrams of caffeine (three to four cups of coffee) there was no improvement in participants’ ability to accurately monitor their own effectiveness.

Even if we ground our conclusion away from the world of space travel, as a leader of an SME you will inevitably be involved in decision making. Without proper sleep, you are likely to be side-lined by irrelevant trivia, will lack innovation, lose track of what was recently said, become more distrustful, less able to negotiate and have less insight into your own behaviour. So why take the risk?

Telling the truth about SME life today

Real Business has championed entrepreneurship in the UK since 1997. It is now the main source of inspiration, education, and collaboration for the owners of fast-growing businesses, from startups to mid-market companies. Real Business provides readers with high profile interviews, news, insight and industry benchmark reports, as well as a growing stable of events tailored to SME growth.